Recently, US federal appeals have abolished the “click-to-cancel" rule, which would have made it easy for consumers to cancel unwanted subscriptions and memberships, just days before it was set to take effect on July 14th, 2025. It was targeted to pay closer attention to all types of negative option marketing, wherein businesses consider a customer’s silence as consent to keep offering the services.
Alongside, the Federal Trade Commission (FTC) stated that companies must also let customers cancel recurring subscriptions as simply as they initiated them and disclose when free trials or other promotional offers will expire. To mention, the “click to cancel” rule first came up in 2023 by the Federal Trade Commission that required companies to allow customers to end subscriptions as they started with them.
Moreover, at this final stage, the US Court of Appeals for the Eight Circuit found that the FTC disobeyed the procedural requirements mentioned in the FTC Act. It declared the use of deceptive practices in subscription marketing unconstitutional.
The court decided to vacate the rule.
“While we certainly do not endorse the use of unfair and deceptive practices in negative option marketing, the procedural deficiencies of the Commission’s rulemaking process are fatal here,” as per the court statement.
Former President Joe Biden’s administration had featured the FTC’s plan as a component of its “Time is Money” campaign, which aims to resolve consumer-related problems.
Major Financial Impact
The U.S. Court of Appeals for the Eighth Circuit vacated the rule, stating that the FTC did not provide any prior regulatory flexibility analysis for rules with an economic impact of more than $100 million despite the FTC having a minimal financial impact.
The FTC had previously claimed that the rule, as written and amended, was intended to be below this threshold. However, this was not the case when the administrative law judge found that the rule was incorrect, and the Court ruled that the rule was void due to procedural flaws in the FTC's rulemaking action. The FTC denied commenting on the court's decision when approached.
In between, for consumers, the FTC continues to file a lawsuit against Amazon regarding its Prime program. The company enrolled customers in its well, making it difficult to cancel their subscriptions, in violation of the haled rule. The trial will be held next year.
This depicts the challenges in subscription-based services and enforcing consumer protection laws, the complicated nature of rules, and the intended effect on economic activity.
Consumers Must Stay Informed!
Until the new rule is live, customers can take several steps to manage their subscriptions, including setting calendar reminders at the end of their free trial periods, regularly reviewing credit cards for recurring charges, and carefully reading the terms and conditions. Furthermore, customers are also advised to deny any retention offers while canceling.
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Also Read: What is Click Fraud? How Can We Prevent it?
